Wednesday, July 11, 2007

Dial 'P' for Vladimir Putin

Vladimir PutinPost 1991, Russia has seen a lot of changes. Before President Vladimir Putin took over power in December 1999, the Russian eonomy was in shambles with increased government debt,currency crisis and insolvent banking system.With the help of rising energy prices,and by courting foreign investments and offering lucrative joint ventures, Putin managed to restore the country to financial health by paying debts and building up hard currency reserves that have now grown to $300 billion.
More importantly, he reined in the power of the Yeltsin-era oligarchs by intimidation. The not-so subservient ones were either exiled to Siberia,immigrated to European nations or have died under mysterious circumstances.

The bigger threat now is Putin's government is reasserting direct government ownership and control over an ever-widening share of the economy by establishing vast state-owned holding companies in automobile and aircraft manufacturing, shipbuilding, nuclear power, diamonds, titanium and other industries justifying it as being in national interest.
Russia's old oligarchs have now been replaced with a new political-economic oligarchy made up of officials and executives friendly with, or beholden to, Putin. They've already tightened their grip on key energy, metals and natural resources sectors, and begun to branch out into finance, real estate, telecommunications and even auto parts.
Recently, Russian oligarch Mikhail Prokhorov, owner of the biggest Nickel corporation, Norilsk Nickel( the largest mining and metals company in Russia and the world's largest producer of nickel and palladium)went out favor with Putin and his share is to be bought out by his partner,Potanin,who is admittedly close to Putin.

In Russia today, no serious deal can be made without approval from the Kremlin. It is increasingly becoming a police state with Putin pulling all the strings.Clearly,in neo-Soviet Russia, the government uses business as a smokescreen to do exactly what the USSR government did openly.


Omni said...

Different models of doing business in so so called "Free New economies" - each one is it from China, Russia , Japan or the Big Apple.

Anonymous said...

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